Defined Contribution vs. Defined Benefit

"...All Other Pay Cash!"

I was doing some research and found this blurb from the National Institute on Retirement Security:

"Worries about retirement security abound. Families fear that they won’t have enough to support an adequate retirement income as home values and financial markets plummet. Dwindling profit margins have employers looking to cut costs.

And governments are concerned about delivering on the promises that they have made to their citizens and to their employees as tax revenues shrink amid a weakening economy. In this environment, some have proposed replacing traditional defined benefit (DB) pensions with 401(k)-type defined contribution (DC) retirement savings plans in an effort to save money.

But decision-makers would be wise to look before they leap. To deliver the same level of retirement benefits, a DB plan can do the job at almost half the cost of a DC plan. Hence, DB plans should remain an integral part of retirement income security in an increasingly uncertain world because they offer employers and employees the best bang for the buck."

Now that is some smooth writing.  I was almost convinced until I re-read it and noticed "To deliver the same level of retirement benefit..." The author isn't talking about the overall tax burden of the benefit but rather the overhead it takes to manage the benefit system.  I will surmise that the defined benefit plan would cost taxpayers far more in the long term than any overhead created in managing a two-tier system that includes a defined contribution plan.  Further, why not simply offer employees an opportunity to meet with a financial planner so that they can create an individual retirement account?  A generous employer may also choose to contribute a small percentage of the employee's gross annual salary each pay period.  Then, management of the funds becomes the responsibility of the employee and not taxpayers.